Wall Street hires Washington

NEW YORK — The financial industry has long been a draw for former political operatives seeking a bigger paycheck and New York lifestyle. But with the big banks now under constant assault from reformers, regulators and some members of Congress, the flow of top talent from Washington to Wall Street has become a small flood.

Two of the biggest blue-chip firms in the industry, Goldman Sachs and Morgan Stanley, will soon have top-level executives with the ear of the CEO who once occupied senior jobs in the White House and the U.S. Treasury. Other banks including Citigroup, Credit Suisse and JPMorgan Chase also have staffed up with former political and regulatory officials.

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In the past, traffic mostly moved the other way. Washington drew from Wall Street to help politicians understand the impact of policy on financial markets. Now the flow has largely reversed as Wall Street increasingly needs to understand — and shape — the way Washington works. Critics call the trend potentially inappropriate influence peddling. Wall Street says it’s just hiring the best talent out there for the way the world works now. Whatever the case, it’s undeniably happening.

“It has really turned around, and it’s now much more about Wall Street collecting political knowledge and influence,” said Charles Geisst, a Wall Street historian at Manhattan College. “And no matter what people on Wall Street will tell you, they remember their 1930s and 1940s history very well, and they know they lost those battles and they are determined not to lose this one.”

Geisst was referring to the post-1929 stock market crash laws that separated investment and traditional consumer banking and created the modern financial regulatory regime. That banking wall came down in the 1990s and now Wall Street wants to make sure it doesn’t go up again, either through strict implementation of the final Dodd-Frank financial reform rules or new measures to curtail risk-taking and make banks hold much more capital.

The latest example of the D.C.-to-N.Y. transfer came last month as Morgan Stanley announced it had hired Michele Davis as a managing director and global head of corporate affairs.

Davis, who served as a chief adviser to Treasury Secretary Hank Paulson (a former Goldman CEO) during the height of the financial crisis, will report directly to Tom Nides, a Washington veteran and former top aide to Hillary Clinton at the State Department, and to Chief Executive James Gorman. In an internal memo announcing the hire, Nides and Gorman praised Davis — portrayed by Cynthia Nixon in the movie “Too Big to Fail” — for her successful career at the “nexus of political and financial media.”

Davis will essentially be Morgan Stanley’s version of Jake Siewert, managing director and head of corporate communications at Goldman Sachs.

Siewert, who served as counselor to Treasury Secretary Timothy Geithner and in multiple roles including press secretary under President Bill Clinton, has quietly helped revolutionize the way the famously secretive Goldman Sachs interacts with the public.

CEO Lloyd Blankfein is now a regular at events around Washington, including the recent Investment Company Institute gathering and a private meeting at the White House late last year. At the ICI event, Blankfein said he had “a lot of regret for not having a lot of dialogue with the public.” The firm, which until fairly recently still operated like the private partnership it once was, now has a Twitter account.

Many other high-profile Wall Street firms are joining the hunt for political veterans from both Washington and New York.